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Zero waste commission endorses sale of city land

Wednesday, January 20, 2016 by Tyler Whitson

In a move that may ultimately help the city create a hub for manufacturing companies that use locally recycled materials, the Zero Waste Advisory Commission has endorsed the sale of a piece of property owned by Austin Resource Recovery.

Nine commissioners supported the measure at last Wednesday’s meeting, with Commissioner Jose Valera abstaining and Vice Chair Cathy Gattuso absent.

After the vote, Chair Gerry Acuna made it clear that the commission’s recommendation – that City Council approve the $1.45 million sale of the 9.4-acre property – should not be taken as relating to the proposed [re]Manufacturing Hub.

“This is strictly to sell a property, identified as 4711 Winnebago Lane, and in no way, shape or form has anything to do with the [re]Manufacturing Hub,” said Acuna, to no objection.

The proceeds, however, could ultimately provide the necessary funding to finance the project, according to Austin Resource Recovery Director Bob Gedert.

“We’ve been holding on to property that the department has no value in keeping, and it has increased in value,” said Gedert. “I want to use the increased market value for the [re]Manufacturing Hub.”

The [re]Manufacturing Hub is a proposal for the establishment of a local facility on more than 100 acres of city-owned property that would house remanufacturers, companies that use recycled materials to create new products.

The proposal is outlined in the Austin Resource Recovery Master Plan that Council adopted in 2011 but will ultimately require Council approval for construction to begin.

The city would provide the basic infrastructure for the hub – including a wastewater line, on-site utility and transportation infrastructure, and project management and engineering services – and the tenants would construct their own buildings and pay the city to lease the property.

Overall, the project would cost an estimated $7.5 million, but the city has come up short.

Natalie Betts, recycling economic development liaison for Austin Resource Recovery, explained that one of the financing mechanisms that the city was previously counting on to fund the project – called certificates of obligation – is no longer a viable option.

“In early 2015, we received advice from our legal team that, due to the economic development ties of this project, that may not be a good source of funds. And, therefore, we have been looking since then to replace that funding in another way,” said Betts.

“We have a strong timeline need to replace that fund because we have a grant that has a construction deadline of July 1 of this year, so we need to replace the grant match, and we also need to fully fund the project so that we can get construction underway,” Betts continued.

The sale of the Winnebago property was the subject of some controversy back in November, when Mayor Pro Tem Kathie Tovo raised concerns about a previous proposal to use the land as a dog park for the Parks and Recreation Department.

Gedert stated that the dog park issue has since been resolved. “Upon further discussion with Parks and Recreation, they decided that that was not the best location. They’ve got a similar location nearby, and they couldn’t afford to purchase the property in the first place. So they relinquished their right to the property,” he said.

Nevertheless, Council deferred an authorization to sell the property to bidder Jimmy Nassour at its Dec. 10 meeting to its upcoming Jan. 28 meeting, referring the issue to the Council Audit and Finance Committee. The committee discussed the issue at its Dec. 14 meeting and will return to the discussion at its Jan. 27 meeting.

Tovo, who chairs the committee, explained her reservations about selling the property at the Dec. 14 meeting. “This tract, I believe, really requires more discussion,” she said. “It is, No. 1, in a parks-deficient area. It is, No. 2, real close to other residential (property), and I believe we should think about whether there are some other strategic purposes that we could put this tract to if it remained within our portfolio and it were possible for Austin Resource Recovery to figure out other ways of matching that grant.”

Council Member Pio Renteria, who also sits on the committee, had a different opinion. “That lot is in an isolated area. It’s very difficult to get to, … and the cost that it would cost to put a road through there, I don’t know if it’s really worth it,” he said. “So my recommendation still is to go ahead and allow it to be sold.”

Commissioner Joshua Blaine explained why he was comfortable supporting the sale of the land but not commenting on the [re]Manufacturing Hub. “This is definitely a rabbit hole we don’t have time to jump down. I feel like there’s a little bit of an iceberg, just like a few things that have been alluded to that just kind of make me feel a little uneasy or uncomfortable,” said Blaine.

“I also agree that what we’re voting on is pretty straightforward, and I don’t think there’s much of a debate as to whether we should make money from this property or not,” Blaine continued. “It’s more about what that money is going to – and that’s not what we’re voting on.”

Blaine may have been referring, in part, to questions raised by Bob Gregory, president and CEO of local waste and recycling processor Texas Disposal Systems, about the potential economic impact of the [re]Manufacturing Hub on existing businesses. He may also have been referring to Acuna’s request for more solid revenue projections for the leases.

Gedert responded to Gregory’s concerns. “There’s no consideration of competing with existing recycling processors or recycling haulers – there’s no competition,” he said.

Betts responded to Acuna’s request. “We have companies that we are interested in talking to, and as we get closer to those relationships, we will have a firmer and firmer idea of what the lease revenues will be and what the specific jobs will be,” she said.

The issue of whether to move forward with constructing the [re]Manufacturing Hub was not on the table, however, and will come up at a later meeting, explained Gedert. “There is a need for a more formal vote of the commission, and we’ll schedule that in, and that general discussion,” he said. “It is not the normal procedures of the city to bring land sales to commissions, but Council asked for it in the Dec. 10 (meeting), and I honored that request.”

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